Related provisions for SYSC 19C.3.31

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SYSC 19A.3.3RRP
(1) This section applies in relation to Remuneration Code staff, except as set out in (3).(2) When establishing and applying the total remuneration policies for Remuneration Code staff, a firm must comply with this section in a way and to the extent that is appropriate to its size, internal organisation and the nature, the scope and the complexity of its activities (the remuneration principles proportionality rule).(3) Paragraphs (1) and (2) do not apply to the requirement for
SYSC 19A.3.7RRP
A firm must ensure that its remuneration policy is consistent with and promotes sound and effective risk management and does not encourage risk-taking that exceeds the level of tolerated risk of the firm.[Note:3article 92(2)(a) of CRD]3
SYSC 19A.3.8RRP
A firm must ensure that its remuneration policy is in line with the business strategy, objectives, values and long-term interests of the firm.[Note:3article 92(2)(b) of CRD]3
SYSC 19A.3.9RRP
A firm must ensure that its remuneration policy includes measures to avoid conflicts of interest.[Note:3article 92(2)(b) of CRD]3
SYSC 19A.3.10RRP
A firm must ensure that its 3management body in its supervisory function adopts and periodically reviews the general principles of the remuneration policy and is responsible for3 overseeing its implementation.3[Note:3article 92(2)(c) of CRD and Standard 1 of the FSB Compensation Standards]3
SYSC 19A.3.11RRP
A firm must ensure that the implementation of the remuneration policy is, at least annually, subject to central and independent internal review for compliance with policies and procedures for remuneration adopted by the 3management body in its supervisory function.3[Note:3article 92(2)(d) of CRD and Standard 1 of the FSB Compensation Standards]3
SYSC 19A.3.12RRP
(1) A6firm that is significant in terms of its size, internal organisation and the nature, the scope and the complexity of its activities must establish a remuneration committee. 3(2) The remuneration committee must be constituted in a way that enables it to exercise competent and independent judgment on remuneration policies and practices and the incentives created for managing risk, capital and liquidity.(3) The chairman and the members of the remuneration committee must be
SYSC 19A.3.13GRP
(1) A firm should be able to demonstrate that its decisions are consistent with an assessment of its financial condition and future prospects. In particular, practices by which remuneration is paid for potential future revenues whose timing and likelihood remain uncertain should be evaluated carefully and the governing body or remuneration committee (or both) should work closely with the firm's risk function in evaluating the incentives created by its remuneration system.(2) The
SYSC 19A.3.15ERP
(1) A firm's risk management and compliance functions should have appropriate input into setting the remuneration policy for other business areas. The procedures for setting remuneration should allow risk and compliance functions to have significant input into the setting of individual remuneration awards where those functions have concerns about the behaviour of the individuals concerned or the riskiness of the business undertaken.(2) Contravention of (1) may be relied on as
SYSC 19A.3.17GRP
(1) This Remuneration Principle is designed to manage the conflicts of interest which might arise if other business areas had undue influence over the remuneration of employees within control functions. Conflicts of interest can easily arise when employees are involved in the determination of remuneration for their own business area. Where these could arise they need to be managed by having in place independent roles for control functions (including, notably, risk management and
SYSC 19A.3.23GRP
(1) This Remuneration Principle stresses the importance of risk adjustment in measuring performance, and the importance within that process of applying judgement6 and common sense. The FCA expects a6firm to apply qualitative judgements and common sense in6 the final decision about the performance-related components6 of variable remuneration pools6. (2) A number of risk-adjustment techniques and measures are available, and a firm should choose those most appropriate to its circumstances.
SYSC 19A.3.25RRP
A firm must base assessments6 of financial performance used to calculate variable remuneration components or pools of variable remuneration components6 principally on profits.
SYSC 19A.3.27RRP
A firm must ensure that its total variable remuneration is generally considerably contracted where subdued or negative financial performance of the firm occurs, taking into account both current remuneration and reductions in payouts of amounts previously earned3, including through malus or clawback arrangements.3[Note:3article 94(1)(n) of CRD and Standard 5 of the FSB Compensation Standards]3
SYSC 19A.3.29RRP
A firm must ensure that:(1) its pension policy is in line with its business strategy, objectives, values and long-term interests;(2) when an employee leaves the firm before retirement, any discretionary pension benefits are held by the firm for a period of five years in the form of instruments referred to in SYSC 19A.3.47 R (1); and(3) 3when an employee reaches retirement, discretionary pension benefits are paid to the employee in the form of instruments referred to in SYSC 19A.3.47
SYSC 19A.3.33GRP
Remuneration Principle 12 consists of a series of rules, evidential provisions and guidance relating to remuneration structures.
SYSC 19A.3.34GRP
(1) Taking account of the remuneration principles proportionality rule, the appropriate regulator7 does not generally consider it necessary for a firm to apply the rules referred to in (2) where, in relation to an individual ("X"), both the following conditions are satisfied:7(a) Condition 1 is that Xs variable remuneration is no more than 33% of total remuneration; and(b) Condition 2 is that Xs total remuneration is no more than 500,000.(2) The rules referred to in (1) are those
SYSC 19A.3.35ARRP
4A firm must ensure that the remuneration policy makes a clear distinction between criteria for setting:(1) basic fixed remuneration that primarily reflects an employee's professional experience and organisational responsibility as set out in the employee's job description and terms of employment; and(2) variable remuneration that reflects performance in excess of that required to fulfil the employee's job description and terms of employment and that is subject to performance
SYSC 19A.3.36RRP
A firm must ensure that where remuneration is performance-related:(1) the total amount of remuneration is based on a combination of the assessment of the performance of:(a) the individual; (b) the business unit concerned; and (c) the overall results of the firm; and(2) when assessing individual performance, financial as well as non-financial criteria are taken into account.[Note:3article 94(1)(a) of CRD and Standard 6 of the FSB Compensation Standards]3
SYSC 19A.3.37GRP
(1) The non-financial criteria in SYSC 19A.3.36R(2) should include:6(a) the extent of the employee’s adherence to effective risk management, and compliance with the regulatory system and with relevant overseas regulatory requirements; and6(b) metrics relating to conduct, which should comprise a substantial portion of the non-financial criteria.6(2) Poor performance, such as poor risk management or other behaviours contrary to firm values, can pose significant risks for a firm
SYSC 19A.3.38RRP
A firm must ensure that the assessment of performance is set in a multi-year framework in order to ensure that the assessment process is based on longer-term performance and that the actual payment of performance-based components of remuneration is spread over a period which takes account of the underlying business cycle of the firm and its business risks.[Note:3article 94(1)(b) of CRD]3
SYSC 19A.3.39AGRP
6A firm should note that the requirement in SYSC 19A.3.36R(2) for financial and non-financial criteria to be taken into account applies wherever remuneration is performance-related including within any assessment of future performance.
SYSC 19A.3.42GRP
Guaranteed variable remuneration should be subject to the same requirements applicable to6 variable remuneration awarded by the firm including deferral, malus and clawback6.
SYSC 19A.3.44RRP
A firm must set an 5appropriate ratio 5between the fixed and variable components of total remuneration and ensure that:(1) fixed and variable components of total remuneration are appropriately balanced;3(2) the level of the 5fixed component represents a sufficiently high proportion of the total remuneration to allow the operation of a fully flexible policy on variable remuneration components, including the possibility to pay no variable remuneration component3; and3(3) subject
SYSC 19A.3.44CRRP
3A firm must notify without delay the FCA6 of the decisions taken by its shareholders or members or owners including any approved higher maximum ratio.[Note: article 94(1)(g)(ii) of CRD]
SYSC 19A.3.44DRRP
3A firm may apply a discount rate to a maximum of 25% of an employee's total variable remuneration provided it is paid in instruments that are deferred for a period of not less than five years.[Note: article 94(1)(g)(iii) of CRD]
SYSC 19A.3.50GRP
(1) Deferred remuneration paid in:6(a) shares or share-linked instruments should be made under a scheme which meets appropriate criteria, including risk adjustment of the performance measure used to determine the initial allocation of shares; and6(b) cash should also be subject to performance criteria.6(2) The FCA6 would generally expect a firm to have a firm-wide policy (and group-wide policy, where appropriate) on deferral. The proportion deferred should generally rise with
SYSC 19A.3.51RRP
A firm must ensure that any variable remuneration, including a deferred portion, is paid or vests only if it is sustainable according to the financial situation of the firm as a whole, and justified on the basis of the performance of the firm, the business unit and the individual concerned.3[Note:article 94(1)(n) of CRD3]
SYSC 19A.3.51ARRP
3A firm must:(1) ensure that any of the total variable remuneration is subject to malus or clawback arrangements;(2) set specific criteria for the application of malus and clawback; and(3) ensure that the criteria for the application of malus and clawback in particular cover situations where the employee: (a) participated in or was responsible for conduct which resulted in significant losses to the firm;(b) failed to meet appropriate standards of fitness and propriety.[Note: article
SYSC 19A.3.52ERP
(1) A firm should reduce unvested deferred variable remuneration when, as a minimum:(a) there is reasonable evidence of employee misbehaviour or material error; or(b) the firm or the relevant business unit suffers a material downturn in its financial performance; or(c) the firm or the relevant business unit suffers a material failure of risk management.(2) For performance adjustment purposes, awards of deferred variable remuneration made in shares or other non-cash instruments
SYSC 19A.3.53GRP
(1) [deleted]6(2) The governing body (or, where appropriate, the remuneration committee) should approve performance adjustment policies, including the triggers under which adjustment would take place. The FCA6 may ask firms to provide a copy of their policies and expects firms to make adequate records of material decisions to operate the adjustments.
SYSC 19A.3.53ARRP
1SYSC 19A Annex 1 makes provision about voiding and recovery.
SYSC 19A.3.54RRP
(1) Subject to (1A) to (3), the rules1 in SYSC 19A Annex 1.1R to 1.4R1 apply in relation to the prohibitions on Remuneration Code staff being remunerated in the ways specified in:11(a) SYSC 19A.3.40 R (guaranteed variable remuneration);(b) SYSC 19A.3.49 R (6deferred variable remuneration); and(c) (replacing payments recovered or property transferred).(1A) Paragraph (1) applies only to those prohibitions as they apply in relation to a firm that satisfies at least one of the conditions
SYSC 19C.3.3RRP
(1) This section applies to BIPRU Remuneration Code staff, except as set out in (3).(2) When establishing and applying the total remuneration policies for BIPRU Remuneration Code staff, a firm must comply with this section in a way and to the extent that is appropriate to its size, internal organisation and the nature, scope and complexity of its activities (the BIPRU remuneration principles proportionality rule).(3) Paragraphs (1) and (2) do not apply to the requirement for significant
SYSC 19C.3.7RRP
A firm must ensure that its remuneration policy is consistent with and promotes sound and effective risk management, and does not encourage risk-taking that exceeds the level of tolerated risk of the firm.
SYSC 19C.3.8RRP
A firm must ensure that its remuneration policy is in line with the business strategy, objectives, values and long-term interests of the firm.
SYSC 19C.3.9RRP
A firm must ensure that its remuneration policy includes measures to avoid conflicts of interest.
SYSC 19C.3.10RRP
A firm must ensure that its governing body, in its supervisory function, adopts and periodically reviews the general principles of the remuneration policy and is responsible for its implementation.
SYSC 19C.3.11RRP
A firm must ensure that the implementation of the remuneration policy is, at least annually, subject to central and independent internal review for compliance with policies and procedures for remuneration adopted by the governing body in its supervisory function.
SYSC 19C.3.12RRP
(1) A firm that is significant in terms of its size, internal organisation and the nature, scope and complexity of its activities must establish a remuneration committee. (2) The remuneration committee must be constituted in a way that enables it to exercise competent and independent judgment on remuneration policies and practices and the incentives created for managing risk, capital and liquidity. (3) The chairman and the members of the remuneration committee must be members
SYSC 19C.3.13GRP
(1) A firm should be able to demonstrate that its decisions are consistent with an assessment of its financial condition and future prospects. In particular, practices by which remuneration is paid for potential future revenues whose timing and likelihood remain uncertain should be evaluated carefully and the governing body or remuneration committee (or both) should work closely with the firm's risk function in evaluating the incentives created by its remuneration system. (2)
SYSC 19C.3.15ERP
(1) A firm's risk management and compliance functions should have appropriate input into setting the remuneration policy for other business areas. The procedures for setting remuneration should allow risk and compliance functions to have significant input into the setting of individual remuneration awards where those functions have concerns about the behaviour of the individuals concerned or the riskiness of the business undertaken.(2) Contravention of (1) may be relied on as
SYSC 19C.3.17GRP
(1) This Remuneration Principle is designed to manage the conflicts of interest which might arise if other business areas had undue influence over the remuneration of employees within control functions. Conflicts of interest can easily arise when employees are involved in the determination of remuneration for their own business area. Where these do arise they need to be managed by having in place independent roles for control functions (including, notably, risk management and
SYSC 19C.3.19GRP
This Remuneration Principle underlines the link between a firm's variable remuneration costs and the need to manage its capital base, including forward-looking capital planning measures. Where a firm needs to strengthen its capital base, its variable remuneration arrangements should be sufficiently flexible to allow it to direct the necessary resources towards capital building.
SYSC 19C.3.22RRP
(1) A firm must ensure that any measurement of performance used to calculate variable remuneration components or pools of variable remuneration components: (a) includes adjustments for all types of current and future risks, taking into account the cost and quantity of the capital and the liquidity required; and (b) takes into account the need for consistency with the timing and likelihood of the firm receiving potential future revenues incorporated into current earnings. (2) A
SYSC 19C.3.23GRP
(1) This Remuneration Principle stresses the importance of risk adjustment in measuring performance, and the importance of applying judgment and common sense. A firm should ask the risk management function to validate and assess risk-adjustment techniques and to attend a meeting of the governing body or remuneration committee for this purpose. (2) A number of risk-adjustment techniques and measures are available, and a firm should choose those that are most appropriate to its
SYSC 19C.3.25RRP
Assessments of financial performance used to calculate variable remuneration components or pools of variable remuneration components must be based principally on profits.
SYSC 19C.3.27RRP
A firm must ensure that its total variable remuneration is generally considerably contracted where subdued or negative financial performance of the firm occurs, taking into account both current remuneration and reductions in payouts of amounts previously earned.[Note: Standard 5 of the FSB Compensation Standards]
SYSC 19C.3.28GRP
Where a firm makes a loss, the FCA generally expects no variable remuneration to be awarded. Variable remuneration may nevertheless be justified, for example to incentivise employees involved in new business ventures which could be loss-making in their early stages.
SYSC 19C.3.29RRP
A firm must ensure that: (1) its pension policy is in line with its business strategy, objectives, values and long-term interests;(2) when an employee leaves the firm before retirement, any discretionary pension benefits are held by the firm for a period of five years in the form of instruments referred to in SYSC 19C.3.47R (1); and(3) when employees reach retirement, discretionary pension benefits are paid to the employee in the form of instruments in SYSC 19C.3.47R (1) and subject
SYSC 19C.3.33GRP
This Remuneration Principle consists of a series of rules, evidential provisions and guidance relating to remuneration structures.
SYSC 19C.3.36RRP
A firm must ensure that where remuneration is performance-related: (1) the total amount of remuneration is based on a combination of the assessment of the performance of: (a) the individual; (b) the business unit concerned; and (c) the overall results of the firm; and (2) when assessing individual performance, financial as well as non-financial criteria are taken into account.
SYSC 19C.3.38RRP
A firm must ensure that the assessment of performance is set in a multi-year framework, to ensure that the assessment process is based on longer-term performance and that the actual payment of performance-based components of remuneration is spread over a period which takes account of the underlying business cycle of the firm and its business risks.
SYSC 19C.3.39GRP
The requirement for assessment of performance to be in a multi-year framework reflects the fact that profits from a firm's activities can be volatile and subject to cycles. The financial performance of firms and individual employees can be exaggerated as a result. Performance assessment on a moving average of results can be a good way of meeting this requirement. However, other techniques, such as good quality risk adjustment and deferral of a sufficiently large proportion of
SYSC 19C.3.41ERP
(1) A firm should not award, pay or provide guaranteed variable remuneration in hiring new BIPRU Remuneration Code staff (X) unless: (a) it has taken reasonable steps to ensure that the remuneration is not more generous in its amount or terms (including any deferral or retention periods) than the variable remuneration awarded or offered by X’s previous employer; and(b) it is subject to appropriate performance adjustment requirements.(2) Contravention of (1) may be relied on as
SYSC 19C.3.44RRP
A firm must set appropriate ratios between the fixed and variable components of total remuneration and ensure that: (1) fixed and variable components of total remuneration are appropriately balanced; and(2) the fixed component represents a sufficiently high proportion of the total remuneration to allow the operation of a fully flexible policy on variable remuneration components, including the possibility to pay no variable remuneration component.
SYSC 19C.3.47RRP
(1) A firm must ensure that a substantial portion, at least 50%, of any variable remuneration consists of an appropriate balance of: (a) shares or equivalent ownership interests, subject to the legal structure of the firm concerned, or share-linked instruments or equivalent non-cash instruments for a non-listed firm; and(b) where appropriate, capital instruments which are eligible for inclusion at stage B1 of the calculation in the capital resources table, where applicable, adequately
SYSC 19C.3.50GRP
(1) Deferred remuneration paid in shares or share-linked instruments should be made under a scheme which meets appropriate criteria, including risk adjustment of the performance measure used to determine the initial allocation of shares. Deferred remuneration paid in cash should also be subject to performance criteria.(2) The FCA generally expects a firm to have a firm-wide policy (and group-wide policy, where appropriate) on deferral. The proportion deferred should generally
SYSC 19C.3.53GRP
(1) Variable remuneration may be justified, for example, to incentivise employees involved in new business ventures which could be loss-making in their early stages. (2) The governing body (or, where appropriate, the remuneration committee) should approve performance adjustment policies, including the triggers under which adjustment would take place. The FCA may ask firms to provide a copy of their policies and expects firms to make adequate records of material decisions to operate
SYSC 19B.1.1AGRP
(1) 2Full-scope UK AIFMs are advised that ESMA published Guidelines on sound remuneration policies under the AIFMD on 3 July 2013, which full-scope UK AIFMs should comply with in applying the rules in this section. The Guidelines can be found at: http://www.esma.europa.eu/system/files/2013-232_aifmd_guidelines_on_remuneration_-_en.pdf(2) The FCA has provided additional guidance on the application of principles of proportionality to remuneration policies of AIFM. The guidance also
SYSC 19B.1.2RRP
An AIFM must establish, implement and maintain remuneration policies and practices for AIFM Remuneration Code staff that are consistent with, and promote, sound and effective risk management and do not encourage risk-taking which is inconsistent with the risk profile of the instrument constituting the fund of the AIFs it manages.[Note: article 13(1) of AIFMD]
SYSC 19B.1.4RRP
(1) When establishing and applying the total remuneration policies for AIFM Remuneration Code staff (inclusive of salaries and discretionary pension benefits), an AIFM must comply with the AIFM remuneration principles in a way and to the extent that is appropriate to its size, internal organisation and the nature, scope and complexity of its activities.(2) Paragraph (1) does not apply to the requirement for significant AIFMs to have a remuneration committee (SYSC 19B.1.9 R).(3)
SYSC 19B.1.5RRP
An AIFM must ensure that its remuneration policy is consistent with, and promotes, sound and effective risk management and does not encourage risk-taking which is inconsistent with the risk profiles of the instrument constituting the fund of the AIFs it manages.[Note: paragraph 1(a) of Annex II of AIFMD]
SYSC 19B.1.6RRP
An AIFM must ensure that its remuneration policy is in line with the business strategy, objectives, values and interests of the AIFM and the AIFs it manages or the investors of such AIFs, and includes measures to avoid conflicts of interest.[Note: paragraph 1(b) of Annex II of AIFMD]
SYSC 19B.1.7RRP
An AIFM must ensure that the governing body of the AIFM, in its supervisory function, adopts and periodically reviews the general principles of the remuneration policy and is responsible for its implementation.[Note: paragraph 1(c) of Annex II of AIFMD]
SYSC 19B.1.8RRP
An AIFM must ensure the implementation of the remuneration policy is, at least annually, subject to central and independent internal review for compliance with policies and procedures for remuneration adopted by the governing body in its supervisory function.[Note: paragraph 1(d) of Annex II of AIFMD]
SYSC 19B.1.9RRP
(1) An AIFM that is significant in terms of its size, internal organisation and the nature, the scope and the complexity of its activities must establish a remuneration committee. (2) The remuneration committee must be constituted in a way that enables it to exercise competent and independent judgment on remuneration policies and practices, and the incentives created for managing risk.(3) The chairman and the members of the remuneration committee must be members of the governing
SYSC 19B.1.11RRP
An AIFM must ensure the remuneration of the senior officers in the risk management and compliance functions is directly overseen by the remuneration committee, or, if such a committee has not been established, by the governing body in its supervisory function.[Note: paragraph 1(f) of Annex II of AIFMD]
SYSC 19B.1.12RRP
An AIFM must ensure that, where remuneration is performance related, the total amount of remuneration is based on a combination of the assessment of the performance of the individual and of the business unit or AIF concerned and of the overall results of the AIFM. When assessing individual performance, financial and non-financial criteria are taken into account.[Note: paragraph 1(g) of Annex II of AIFMD]
SYSC 19B.1.13RRP
An AIFM must ensure that the assessment of performance is set in a multi-year framework appropriate to the life-cycle of the AIFs managed by the AIFM to ensure that:(1) the assessment process is based on longer term performance; and(2) the actual payment of performance-based components of remuneration is spread over a period which takes account of the redemption policy of the AIFs it manages and their investment risks.[Note: paragraph 1(h) of Annex II of AIFMD]
SYSC 19B.1.13AGRP
(1) 2Taking account of the remuneration principles proportionality rule in SYSC 19B.1.4 R, the FCA does not generally consider it necessary for a firm to apply the rules referred to in (2) where, in relation to an individual ("X"), both of the following conditions are satisfied:(a) Condition 1 is that X's variable remuneration is no more than 33% of total remuneration; and(b) Condition 2 is that X's total remuneration is no more than £500,000.(2) The rules referred to in (1) are
SYSC 19B.1.14RRP
An AIFM must not award, pay or provide guaranteed variable remuneration unless it; (1) is exceptional;(2) occurs only in the context of hiring new staff; and(3) is limited to the first year of service.[Note: paragraph 1(i) of Annex II of AIFMD]
SYSC 19B.1.15RRP
An AIFM must ensure that:3(1) fixed and variable components of total remuneration are appropriately balanced; and(2) the fixed component represents a sufficiently high proportion of the total remuneration to allow the operation of a fully flexible policy on variable remuneration components, including the possibility to pay no variable remuneration component.[Note: paragraph 1(j) of Annex II of AIFMD]
SYSC 19B.1.17RRP
(1) Subject to the legal structure of the AIF and the instrument constituting the fund, an AIFM must ensure that a substantial portion, and in any event at least 50% of any variable remuneration, consists of units or shares of the AIF concerned, or equivalent ownership interests, or share-linked instruments or equivalent non-cash instruments. However, if the management of AIFs accounts for less than 50% of the total portfolio managed by the AIFM, the minimum of 50 % does not apply.(2)
SYSC 19B.1.18RRP
(1) An AIFM must not award, pay or provide a variable remuneration component unless a substantial portion, and in any event at least 40%, of the variable remuneration component, is deferred over a period which is appropriate in view of the life cycle and redemption policy of the AIF concerned and is correctly aligned with the nature of the risks of the AIF in question(2) The period referred to in (1) must be at least three to five years, unless the life cycle of the AIF concerned
SYSC 19B.1.18AGRP
(1) 2£500,000 is a particularly high amount for the purpose of SYSC 19B.1.18R (4).(2) Paragraph (1) is without prejudice to the possibility of lower sums being considered a particularly high amount.(3) Whilst any variable remuneration component of £500,000 or more paid to AIFM Remuneration Code staff should be subject to 60% deferral, firms should also consider whether lesser amounts should be considered to be 'particularly high', taking account, for example, of whether there
SYSC 19B.1.19RRP
An AIFM must ensure that any variable remuneration, including a deferred portion, is paid or vests only if it is sustainable according to the financial situation of the AIFM as a whole and justified according to the performance of the AIF, the business unit and the individual concerned.[Note: paragraph 1(o) first sub-paragraph of Annex II of AIFMD]
SYSC 19B.1.20GRP
The total variable remuneration should generally be considerably contracted where subdued or negative financial performance of the AIFM or of the AIF concerned occurs, taking into account both current compensation and reductions in payouts of amounts previously earned, including through malus or clawback arrangements.[Note: paragraph 1(o) second sub-paragraph of Annex II of AIFMD]
SYSC 19B.1.21RRP
An AIFM must ensure the measurement of performance used to calculate variable remuneration components, or pools of variable remuneration components, includes a comprehensive adjustment mechanism to integrate all relevant types of current and future risks.[Note: paragraph 1(l) of Annex II of AIFMD]
COBS 6.1E.1RRP
(1) 1A2platform service provider must clearly disclose the total platform charge to the retail client32 in a durable medium in good time before the provision of designated investment business.22(2) In the event that it is not possible to make the disclosure in (1) in good time before the provision of designated investment business, the disclosure must be made as soon as practicable thereafter.
COBS 6.1E.2GRP
A2platform service provider should pay due regard to its obligations under Principle 6 (Customers’ interests), Principle 7 (Communications with clients) and the client's best interests rule, and ensure that it presents retail investment products without bias.2232
COBS 6.1E.4RRP
2Except as specified in COBS 6.1E.6 R and COBS 6.1E.7 R, a platform service provider must:(1) only be remunerated for its platform service (and any other related services it provides), by platform charges; and(2) ensure that none of its associates accepts any remuneration in respect of those services.
COBS 6.1E.5GRP
2Examples of remuneration that should not be accepted by a platform service provider or its associates include (but are not limited to):(1) a share of an annual management charge; and(2) any payment (other than a product charge or a platform charge) made to a platform service provider in its capacity as a retail investment product provider where the relevant retail investment product is distributed to retail clients by its platform service.
COBS 6.1E.6RRP
2A platform service provider or its associates may solicit and accept payments from:(1) a firm, other than a retail investment product provider, which is in the business of making personal recommendations to retail clients in relation to retail investment products; and/or(2) a firm, other than a retail investment product provider, which is in the business of arranging or dealingretail investment products for retail clients.
COBS 6.1E.7RRP
2Other than in COBS 6.1E.6 R, a3platform service provider or its associates may solicit and accept payments from any3firm, including a retail investment product provider,3 which are only for:(1) pricing error corrections;(2) administering corporate actions;(3) research carried out by the platform service provider and management information; and(4) advertising;provided that:(5) the services are available to firms at a price which does not vary inappropriately according to firm;(6)
COBS 6.1E.8RRP
2A platform service provider must not arrange for a retail client to buy a retail investment product if:(1) the product’s charges are presented in a way that offsets or may appear to offset any adviser charges or platform charges that are payable by that retail client; or(2) the platform service provider's charges are presented in a way that offsets or may appear to offset any product charges or adviser charges that are payable by the retail client; or(3) the product’s charges
COBS 6.1E.9RRP
2A firm must not use a platform service as part of a personal recommendation to a retail client in relation to a retail investment product unless it has satisfied itself that the platform service provider, and its associates, only receive remuneration for business carried on in the UK which is permitted by the rules in this section.
COBS 6.1E.10RRP
2COBS 6.1E.4 R does not prevent a platform service provider receiving a share of an annual management charge from an authorised fund manager if the platform service provider passes that share on to the retail client in the form of:(1) additional units; or(2) cash, provided that it does not offset or appear to offset any adviser charges or platform charges.
COBS 6.1E.11GRP
2Examples of a cash share of an annual management charge that would not offset or appear to offset any adviser charges or platform charges are:(1) where the retail client has redeemed his retail investment product; or(2) where the value of the payment made to the retail client in each month does not exceed £1 for each fund.
COBS 6.1E.12GRP
2If a platform service provider passes a share of an annual management charge on to a retail client by way of additional units or cash, it should pay due regard to its obligations under Principle 7 (Communications with clients).
SYSC 19D.3.3RRP
(1) This section applies in relation to dual-regulated firms Remuneration Code staff, except as set out in (3).(2) When establishing and applying the total remuneration policies for dual-regulated firms Remuneration Code staff, a firm must comply with this section in a way, and to the extent, that is appropriate to its size, internal organisation and the nature, the scope and the complexity of its activities (the dual-regulated firms remuneration principles proportionality rule).(3)
SYSC 19D.3.7RRP
A firm must ensure that its remuneration policy is consistent with, and promotes, sound and effective risk management and does not encourage risk-taking that exceeds the level of tolerated risk of the firm.[Note: article 92(2)(a) of CRD]
SYSC 19D.3.8RRP
A firm must ensure that its remuneration policy is in line with the business strategy, objectives, values and long-term interests of the firm.[Note: article 92(2)(b) of CRD]
SYSC 19D.3.9RRP
A firm must ensure that its remuneration policy includes measures to avoid conflicts of interest.[Note: article 92(2)(b) of CRD]
SYSC 19D.3.10RRP
A firm must ensure that its management body in its supervisory function adopts and periodically reviews the general principles of the remuneration policy and is responsible for overseeing its implementation.[Note: article 92(2)(c) of CRD and Standard 1 of the FSB Compensation Standards]
SYSC 19D.3.11RRP
A firm must ensure that the implementation of the remuneration policy is, at least annually, subject to central and independent internal review for compliance with policies and procedures for remuneration adopted by the management body in its supervisory function.[Note: article 92(2)(d) of CRD and Standard 1 of the FSB Compensation Standards]
SYSC 19D.3.12RRP
(1) A firm that is significant in terms of its size, internal organisation and the nature, the scope and the complexity of its activities must establish a remuneration committee. (2) A firm in (1) must ensure that:(a) the remuneration committee is constituted in a way that enables it to exercise competent and independent judgement on remuneration policies and practices and the incentives created for managing risk, capital and liquidity;(b) the chairman and the members of the remuneration
SYSC 19D.3.14GRP
(1) A firm should be able to demonstrate that its decisions are consistent with an assessment of its financial condition and future prospects. In particular, practices by which remuneration is paid for potential future revenues whose timing and likelihood remain uncertain should be evaluated carefully and the governing body or remuneration committee (or both) should work closely with the firm's risk function in evaluating the incentives created by its remuneration system. (2)
SYSC 19D.3.16ERP
(1) A firm's risk management and compliance functions should have appropriate input into setting the remuneration policy for other business areas. The procedures for setting remuneration should allow risk and compliance functions to have significant input into the setting of individual remuneration awards where those functions have concerns about the behaviour of the individuals concerned or the riskiness of the business undertaken.(2) Contravention of (1) may be relied on as
SYSC 19D.3.18GRP
(1) This Remuneration Principle is designed to manage the conflicts of interest which might arise if other business areas had undue influence over the remuneration of employees within control functions. Conflicts of interest can easily arise when employees are involved in the determination of remuneration for their own business area. Where these could arise, they need to be managed by having in place independent roles for control functions (including, notably, risk management
SYSC 19D.3.24GRP
(1) This Remuneration Principle stresses the importance of risk adjustment in measuring performance, and the importance within that process of applying judgment and common sense. The FCA expects that a firm will apply qualitative judgements and common sense in the final decision about the performance-related components of variable remuneration pools. (2) [deleted]1(3) We consider good practice in this area to be represented by those firms who provide a quantitative reference or
SYSC 19D.3.35GRP
(1) Taking account of the dual-regulated firms remuneration principles proportionality rule, the FCA does not generally consider it necessary for a firm to apply the rules in (2) where, in relation to an individual (X), both the following conditions are satisfied:(a) Condition 1 is that X’s variable remuneration is no more than 33% of total remuneration; and(b) Condition 2 is that X’s total remuneration is no more than £500,000.(2) The rules referred to in (1) are those relating
SYSC 19D.3.37RRP
A firm must ensure that the remuneration policy makes a clear distinction between criteria for setting:(1) basic fixed remuneration that primarily reflects an employee's professional experience and organisational responsibility, as set out in the employee's job description and terms of employment; and(2) variable remuneration that reflects performance in excess of that required to fulfil the employee's job description and terms of employment and that is subject to performance
SYSC 19D.3.48RRP
A firm must set an appropriate ratio between the fixed and variable components of total remuneration and ensure that:(1) fixed and variable components of total remuneration are appropriately balanced;(2) the level of the fixed component represents a sufficiently high proportion of the total remuneration to allow the operation of a fully flexible policy on variable remuneration components, including the possibility to pay no variable remuneration component; and(3) subject to SYSC
SYSC 19D.3.60GRP
(1) Deferred remuneration paid in:(a) shares or share-linked instruments should be made under a scheme which meets appropriate criteria, including risk adjustment of the performance measure used to determine the initial allocation of shares;(b) cash should also be subject to performance criteria.(2) The FCA would generally expect a firm to have a firm-wide policy (and group-wide policy, where appropriate) on deferral. The proportion deferred should generally rise with the ratio
SYSC 19D.3.65GRP
The governing body (or, where appropriate, the remuneration committee) should approve performance adjustment policies, including the triggers under which adjustment would take place. The FCA may ask firms to provide a copy of their policies and expects firms to make adequate records of material decisions to operate the adjustments.
SYSC 19E.2.1RRP
1A management company must establish and apply remuneration policies and practices for UCITS Remuneration Code staff that: (1) are consistent with and promote sound and effective risk management;(2) do not encourage risk taking which is inconsistent with the risk profiles or the instrument constituting the fund or the prospectus, as applicable, of the UCITS it manages; (3) do not impair the management company’s compliance with its duty to act in the best interests of the UCITS
SYSC 19E.2.4RRP
(1) When establishing and applying the remuneration policies for UCITS Remuneration Code staff, a management company must comply with the UCITS remuneration principles in a way and to the extent that is appropriate to: (a) its size;(b) internal organisation; and(c) the nature, scope and complexity of its activities.(2) Paragraph (1) does not apply to the requirement for significant management companies to have a remuneration committee (SYSC 19E.2.9R).(3) The UCITS remuneration
SYSC 19E.2.5RRP
A management company must ensure that its remuneration policy: (1) is consistent with, and promotes sound and effective risk management; and(2) does not encourage risk taking which is inconsistent with the risk profiles or the instrument constituting the fund of the UCITS it manages.[Note: article 14b(1)(a) of the UCITS Directive]
SYSC 19E.2.6RRP
A management company must ensure that its remuneration policy: (1) is in line with the business strategy, objectives, values and interests of: (a) the management company; (b) the UCITS it manages; and(c) the investors in such UCITS; and(2) includes measures to avoid conflicts of interest.[Note: article 14b(1)(b) of the UCITS Directive]
SYSC 19E.2.7RRP
(1) A management company must ensure that its management body in its supervisory function: (a) adopts and reviews at least annually the general principles of the remuneration policy; and(b) is responsible for the implementation of the general principles of the remuneration policy.(2) The tasks in (1) must be undertaken only by members of the management body who:(a) do not perform any executive functions in the management company concerned; and (b) have expertise in risk management
SYSC 19E.2.8RRP
A management company must ensure the implementation of the remuneration policy is, at least annually, subject to central and independent internal review for compliance with policies and procedures for remuneration adopted by the management body in its supervisory function.[Note: article 14b(1)(d) of the UCITS Directive]
SYSC 19E.2.9RRP
(1) A management company must establish a remuneration committee if it is significant in terms of: (a) its size, or the size of the UCITS that it manages2; (b) [deleted]2(c) the complexity of its internal organisation; and2(d) the nature, the scope and the complexity of its activities.(2) The remuneration committee must be constituted in a way that enables it to exercise competent and independent judgment on: (a) remuneration policies and practices; and(b) the incentives created
SYSC 19E.2.17GRP
(1) Taking account of the remuneration principles proportionality rule in SYSC 19E.2.4R, the FCA does not generally consider it necessary for a management company to apply the rules referred to in (2) where, in relation to an individual (“X”), both the following conditions are satisfied: (a) Condition 1 is that X’s variable remuneration is no more than 33% of total remuneration; and (b) Condition 2 is that X’s total remuneration is no more than £500,000. (2) The rules to which
SYSC 19A.2.1RRP
A firm must establish, implement and maintain remuneration policies, procedures and practices that are consistent with and promote sound and effective risk management.[Note:1article 74(1) of CRD]1
SYSC 19A.2.2GRP
(1) [deleted]2(2) The Remuneration Code covers all aspects of remuneration that could have a bearing on effective risk management including salaries, bonuses, long-term incentive plans, options, hiring bonuses, severance packages and pension arrangements.2(3) As with other aspects of a firm's systems and controls, in accordance with SYSC 4.1.2 Rremuneration policies, procedures and practices must be comprehensive and proportionate to the nature, scale and complexity of the common
SYSC 19A.2.3GRP
(1) [deleted]2(2) [deleted]2(3) The FCA2 would also expect firms to apply, on a firm-wide basis,2 at least the principles relating to: (a) risk management and risk tolerance (Remuneration Principle 1);2(b) supporting business strategy, objectives, values and long-term interests of the firm (Remuneration Principle 2);2(c) conflicts of interest (Remuneration Principle 3);2(d) governance (Remuneration Principle 4);2(e) risk adjustment (Remuneration Principle 8);2(f) pension policy
SYSC 19A.2.4GRP
In line with the record-keeping requirements in SYSC 9, a firm should ensure that its remuneration policies, practices and procedures are clear and documented. Such policies, practices and procedures would include performance appraisal processes and decisions.
COBS 6.1F.-1RRP
This section does not apply if the retail client is outside the United Kingdom.
COBS 6.1F.1RRP
1A firm which:2(1) arranges for retail clients to buy retail investment products or makes personal recommendations to retail clients in relation to retail investment products; and22(2) uses a platform service for that purpose;must take reasonable steps to ensure that it uses a platform service which presents its retail investment products without bias.
COBS 6.1F.2GRP
When selecting and using a platform service for the purpose described in COBS 6.1F.1 R, a firm should be mindful of its duty to comply with the client's best interests rule and the rules3 on inducements (COBS 2.3.1 R, COBS 2.3A.5R and COBS 2.3A.15R3).
SYSC 19D.1.3RRP
(1) Except as set out in (2) and (3), a firm must apply the remuneration requirements in SYSC 19D.3 (Remuneration principles) in relation to:(a) remuneration awarded, whether pursuant to a contract or otherwise, on or after 1 January 2011;(b) remuneration due on the basis of contracts concluded before 1 January 2011 which is awarded or paid on or after 1 January 2011; and(c) remuneration awarded, but not yet paid, before 1 January 2011, for services provided in 2010.[Note: article
SYSC 19D.1.6GRP
(1) The aim of the dual-regulated firms Remuneration Code is to ensure that firms have risk-focused remuneration policies, which are consistent with and promote effective risk management and do not expose them to excessive risk. It expands upon the general organisational requirements in SYSC 4.(2) The dual-regulated firms Remuneration Code implements the main provisions of the CRD which relate to remuneration. In applying the rules in the dual-regulated firms Remuneration Code,
SYSC 19D.1.7GRP
(1) In addition to the notification requirements in the dual-regulated firms Remuneration Code2, general circumstances in which the FCA expects to be notified by firms of matters relating to their compliance with requirements under the regulatory system are set out in SUP 15.3 (General notification requirements).(2) For remuneration matters in particular, those circumstances should take into account unregulated activities, as well as regulated activities and the activities of
SYSC 19D.1.8GRP
The FCA's policy on individual guidance is set out in SUP 9. Firms should particularly note the policy on what the FCA considers to be a reasonable request for guidance (see SUP 9.2.5G). For example, where a firm is seeking guidance on a proposed remuneration structure, the FCA will expect the firm to provide a detailed analysis of how the structure complies with the dual-regulated firms Remuneration Code, including the general requirement for remuneration policies, procedures
MCOB 2A.1.2RRP
When establishing and applying remuneration policies for members of staff who are responsible for the assessment of affordability for consumers, an MCD mortgage lender must comply with the following principles:(1) be consistent with, and promote, sound and effective risk management;(2) not encourage risk-taking that exceeds the level of tolerated risk of the MCD mortgage lender;(3) be in line with the business strategy, objectives, values and long-term interests of the MCD mortgage
MCOB 2A.1.4RRP
An MCD mortgage adviser, or any other firm that is an MCD mortgage lender or an MCD mortgage arranger that provides advisory services within the meaning of article 4(21) of the MCD, must ensure that the remuneration structure of the members of staff involved does not:(1) prejudice the ability of the members of staff or the firm to act in the consumer's best interest; and(2) be contingent on sales targets.[Note: article 7(4) of the MCD]
MCOB 2A.1.5GRP
The remuneration policies of MCD mortgage lenders and MCD mortgage credit intermediaries, including those that take account of sales volumes, should not be designed in a way that would incentivise their members of staff to conclude a given number or type of MCD regulated mortgage contracts.
SYSC 19D.2.1RRP
A firm must establish, implement and maintain remuneration policies, procedures and practices that are consistent with, and promote, sound and effective risk management.[Note: article 74(1) of CRD]
SYSC 19D.2.2GRP
(1) The dual-regulated firms Remuneration Code covers all aspects of remuneration that could have a bearing on effective risk management, including salaries, bonuses, long-term incentive plans, options, hiring bonuses, severance packages and pension arrangements.(2) As with other aspects of a firm's systems and controls, in accordance with SYSC 4.1.2R (general organisational requirements) remuneration policies, procedures and practices must be comprehensive and proportionate to
SYSC 19D.2.3RRP
In line with the record-keeping requirements in SYSC 9, a firm must ensure that its remuneration policies, practices and procedures, including performance appraisals processes and decisions, are clear and documented.
SYSC 19C.1.3RRP
A firm must apply the remuneration requirements in SYSC 19C.3 to: (1) remuneration awarded, whether under a contract or otherwise, on or after 1 January 2014; (2) remuneration due on the basis of contracts concluded before 1 January 2014 which is awarded or paid on or after 1 January 2014; and(3) remuneration awarded, but not yet paid, before 1 January 2014, for services provided in 2013.
SYSC 19C.1.6GRP
The aim of the BIPRU Remuneration Code is to ensure that firms have risk-focused remuneration policies, which are consistent with and promote effective risk management and do not expose them to excessive risk. It expands upon the general organisational requirements in SYSC 4.
SYSC 19C.1.7GRP
(1) The BIPRU Remuneration Code does not contain specific notification requirements. However, general circumstances in which the FCA expects to be notified by firms of matters relating to their compliance with requirements under the regulatory system are set out in SUP 15.3 (General notification requirements). (2) In particular, in relation to remuneration matters, such circumstances should take into account unregulated activities as well as regulated activities and the activities
SYSC 19C.1.8GRP
The FCA's policy on individual guidance is set out in SUP 9. Firms should particularly note the policy on what the FCA considers to be a reasonable request for guidance (see SUP 9.2.5 G). For example, where a firm is seeking guidance on a proposed remuneration structure, the FCA will expect the firm to provide a detailed analysis of how the structure complies with the BIPRU Remuneration Code, including the general requirement for remuneration policies, procedures and practices
SYSC 19A.1.6GRP
(1) The aim of the Remuneration Code is to ensure that firms have risk-focused remuneration policies, which are consistent with and promote effective risk management and do not expose them to excessive risk. It expands upon the general organisational requirements in SYSC 4.(2) The Remuneration Code implements the main provisions of the 3CRD which relate to remuneration. 7In applying the Remuneration Code, firms should comply with the Guidelines published by the EBA on 21 December
SYSC 19A.1.7GRP
(1) 7In addition to the notification requirements in the Remuneration Code7 general circumstances in which the FCA7 expects to be notified by firms of matters relating to their compliance with requirements under the regulatory system are set out in SUP 15.3 (General notification requirements). (2) In particular, in relation to remuneration matters such circumstances should take into account unregulated activities as well as regulated activities and the activities of other members
SYSC 19A.1.8GRP
The FCA's policy on individual guidance is set out in SUP 9. Firms should in particular note the policy on what the FCA considers to be a reasonable request for guidance (see SUP 9.2.5 G). For example, where a firm is seeking guidance on a proposed remuneration structure the FCA will expect the firm to provide a detailed analysis of how the structure complies with the Remuneration Code, including the general requirement for remuneration policies, procedures and practices to be
SYSC 19C.2.1RRP
A firm must establish, implement and maintain remuneration policies, procedures and practices that are consistent with and promote sound and effective risk management.
SYSC 19C.2.2GRP
(1) If a firm'sremuneration policy is not aligned with effective risk management, it is likely that employees will have incentives to act in ways that might undermine effective risk management. (2) The BIPRU Remuneration Code covers all aspects of remuneration that could have a bearing on effective risk management including salaries, bonuses, long-term incentive plans, options, hiring bonuses, severance packages and pension arrangements. In applying the BIPRU Remuneration Code,
SYSC 19C.2.4GRP
In line with the record-keeping requirements in SYSC 9, a firm should ensure that its remuneration policies, practices and procedures are clear and documented. Such policies, practices and procedures would include performance appraisal processes and decisions.
SYSC 7.1.7BGRP
In setting the method of determining the remuneration of employees involved in the risk management function:(1) firms that SYSC 19D applies to will also need to comply with the dual-regulated firms Remuneration Code; and(2) firms that the remuneration part of the PRA Rulebook applies to will also need to comply with it.16513138
SYSC 7.1.7BCGRP
In setting the method of determining the remuneration of employees involved in the risk management function, firms that SYSC 19A applies to will also need to comply with the Remuneration Code.
SYSC 7.1.20RRP
13In order to assist in the establishment of sound remuneration policies and practices, the risk committee must, without prejudice to the tasks of the remuneration committee, examine whether incentives provided by the remuneration system take into consideration risk, capital, liquidity and the likelihood and timing of earnings.[Note: article 76(4) of CRD]
COLL 4.5.7RRP
(1) An annual long report on an authorised fund, other than a scheme which is an umbrella, must contain:(a) the 3accounts for the annual accounting period which must be prepared in accordance with the requirements of the IMA SORP;(b) the report of the authorised fund manager in accordance with COLL 4.5.9 R (Authorised fund manager's report);(c) comparative information12 in accordance with COLL 4.5.10 R (Comparative information12);1212(d) the report of the depositary in accordance
COLL 4.5.7AGRP
(1) 13The FCA recognises that the annual long report, including the remuneration related disclosures in COLL 4.5.7R(7), may be required to be made available to unitholders before the completion of the authorised fund manager’s first annual performance period in which it has to comply with the UCITS Remuneration Code.(2) Under (1), the FCA expects the authorised fund manager to make best efforts to comply with COLL 4.5.7R(7) to the extent possible.(3) The authorised fund manager,
SYSC 21.1.2GRP
(1) A Chief Risk Officer should:(a) be accountable to the firm'sgoverning body for oversight of firm-wide risk management;(b) be fully independent of a firm's individual business units;(c) have sufficient authority, stature and resources for the effective execution of his responsibilities; (d) have unfettered access to any parts of the firm's business capable of having an impact on the firm's risk profile; (e) ensure that the data used by the firm to assess its risks are fit for
SYSC 4.3A.1ARRP
4Without prejudice to SYSC 4.3A.1R, a common platform firm must ensure that the management body defines, approves and oversees:(1) the organisation of the firm for the provision of investment services and/or activities and ancillary services, including the skills, knowledge and expertise required by personnel, the resources, the procedures and the arrangements for the provision of services and activities, taking into account the nature, scale and complexity of its business and
COLL 4.7.2RRP
(1) An authorised fund manager must6 draw up a short document in English containing key investor information6 for investors:6(a) in each UCITS scheme which it manages (a key investor information document); and6(b) in each KII-compliant NURS which it manages (a NURS-KII document).6(2) The words "key investor information" must be clearly stated in the key investor information document and NURS-KII document6.(3) Key investor information must include appropriate information about